(Resource News International) — Canada’s status as a reliable supplier of grains and oilseeds is again being threatened, this time by a labour dispute between Canadian National Railway (CN) and 1,700 locomotive engineers represented by the Teamsters Canada Rail Conference (TCRC).
The TCRC on Wednesday served CN officials with a 72-hour strike notice on after CN said it plans to incorporate a 1.5 per cent wage increase coupled with the requirement to have locomotive engineers work an additional 500 miles per month over the amount required by the present collective agreement.
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CN “has forced us to serve strike notice after they informed us of unilateral changes to the terms and conditions of the collective agreement which effectively locked out our members,” TCRC president Daniel Shewchuk said previously.
“If the locomotive engineers go out on strike, the entire rail car movement on CN’s lines is bound to slow considerably,” said Mike Jubinville, an analyst with ProFarmer Canada in Winnipeg.
Some sort of backlog of rail cars will certainly come out of this work disruption as CN is unlikely to be able to keep its system running efficiently without these employees, he said.
“Any strike/lockout will not be good for Canada’s grain and oilseed export program,” Jubinville stressed.
CN supervisors will try to take over from the locomotive engineers where possible, but that will not be enough to cover all the freight service CN provides to its customers, resulting in delays, he said.
“We are aware of the potential for the disruption in rail service on CN,” saidf John Lyons, a spokesman for the Canadian Wheat Board in Winnipeg.
The CWB was still hoping the two sides could resolve their labour issues before the Saturday (Nov. 28) deadline and maintain a steady freight service, he said.
“It is still too early to say what will need to happen as we are optimistic they can still work these issues out,” Lyons said. However, he did acknowledge that contingency plans would be initiated by the CWB if seen as necessary.
If the labour dispute results in a strike and if the strike continues for any length of time, the CWB has in the past used the U.S. railway system to move commodities, brokers said.
Canola futures
The potential for the labour disruption on CN rail lines has helped to stimulate selling in canola futures, which are traded on the ICE Futures Canada platform.
“We’ve seen some extra commercial selling hit canola because of the potential rail service disruption,” said Keith Ferley of RBC Dominion Securities in Winnipeg.
“Without rail movement, buyers from importing countries shy away from taking Canada’s canola, as do domestic processors, who have no way of moving canola byproducts such as canola oil and canola meal.”
Federal mediators who have been working with CN and the TCRC called a meeting for Friday (Nov. 27) between both sides in an effort to avoid a work disruption.
The TCRC-represented engineers’ last contract with CN expired Dec. 31, 2008.
Calls to federal Agriculture Minister Gerry Ritz, to see if the Canadian government would implement back-to-work legislation to end the dispute and prevent any deterioration in Canada’s reputation as a reliable grain exporter, were not immediately returned.
If the locomotive engineers are forced to follow through on their strike initiative, the movement of all freight, including grain and oilseeds, on CN rail lines will be slowed if not halted, TCRC said.
If the TCRC strikes, CN in a release said it would provide the best possible service to its customers under the circumstances.
